Former Fannie Mae executive Ed Pinto, who worked at the mortgage giant before it began buying up risky mortgages, has also described Fannie Maes key role in buying up and promoting risky sub-prime mortgages, which Fannie Mae did on a large scale, despite having a capital cushion that was tiny compared to private banks, resulting in its later insolvency and massive taxpayer bailout.

A recent book about the causes of the crisis by New York Times business reporter Gretchen Morgenson and financial analyst Josh Rosner, Reckless Endangerment, chronicles how it was Fannie Mae and the government housing policies it supported, pursued, and exploited that brought the financial system to a halt in 2008. Financial analysts have recently concluded that federal agencies and the GSEs played a larger role in causing the financial crisis than previously thought.

“Our Fedgubmint is reinflating the housing bubble again via Fannie and Freddie.”

The number of people in this country who paid dearly for this leftist experiment in social engineering is staggering. A large percentage of the retirement age population the democrats claim they are ‘protecting’ have been the hard hit by this economic debacle, fueled in very large measure by democrat policies. The question is not ‘when is the government going to learn’. The question is when are the usual democrat voting groups going to realize that they are voting against their own best interests, and against the best interests of the nation as a whole?

"The CRA and other government mandates didnt cover Wall Street investment banks like Goldman Sachs, pure mortgage lenders like Ameriquest, nor hedge funds like John Paulson.

"The IBs, pure mortgage lenders, and hedge funds cranked out trillions of dollars worth of subprime paper and derivatives, all in the private sector and all in competition with Fannie Mae and Freddie Mac. They did it without any government pressure. They did it because they were making a ton of money in the subprime market.

"Peter Ferrara is perpetuating a politically convenient myth, that the government caused it all, which gets treated like Gospel around here because a lot of conservatives start with the belief that only government could do something so stupid and damaging, and the facts be damned if they indicate otherwise.

"Well Wall Street spent a whole lot of money paying politicians of both stripes to dismantle the Glass Steagall act and to pass laws to prevent regulation of the derivatives industry. Google GrammLeachBliley and the Commodities Futures Modernization Act of 2000. The private shadow banking sector was in the subprime market up to their eyeballs, without government pressure, and they did a whole lot of stupid and destructive things, courtesy of their refusal to price risk correctly due to their idiotic belief in David X Lis Gaussian Copula Function.

"HUD and the CRA ought to be scrapped. But so should the claim that the government caused the crisis and that the lending business was simply an innocent victim of government regulation."

the private sector can do dumb things all on their own without gubmint help or encouragement.

If left solely to their own devices, it ‘s a short cycle. Add gubmint money and “help” and it’s a long, neverending cycle (and the dumber they are free to be)

Pinto says that the Riegle-Neal Act of 1995 that allowed interstate mergers between “adequately capitalized and managed banks, subject to concentration limits, state laws and Community Reinvestment Act (CRA) evaluations.” was much more harmful than repeal of Glass Steagall.

There are still plenty of idiots from both parties still insisting everyone should own a home.

Pinto says that the Riegle-Neal Act of 1995 that allowed interstate mergers between adequately capitalized and managed banks, subject to concentration limits, state laws and Community Reinvestment Act (CRA) evaluations. was much more harmful than repeal of Glass Steagall.

Could be. Both Riegle-Neal and the Glass-Steagall repeal were small-government moves. Too small, it turns out.

“If left solely to their own devices, it s a short cycle. Add gubmint money and help and its a long, neverending cycle (and the dumber they are free to be)”

I think it was structural changes in mortgage financing and widespread fraud that lengthened this last cycle. Going by affordability numbers the housing cycle should have peaked around 2003. Of course it didn’t, instead it got a second wind and roared off into bubble land.

After 2003 Wall Street’s private market securitizers were taking market share away from Fannie and Freddie. The rating agencies were slapping AAA ratings on that paper, Wall Street financiers were deluding themselves with the Gaussian copula function, and derivatives were driving the demand for huge quantities of subprime paper to be used as derivative fodder.

The old model of lenders writing and often retaining their own mortgage paper had a built-in bias towards safety. Fannie and Freddie had a monopoly on reselling that paper. It was conforming, it was predictable, it was safe and boring.

But this last cycle blew up that model. The new model was an independent broker writing mortgages, using a warehouse credit line from Wall Street. Neither the mortgage broker nor the Wall Street lender had much concern for the credit quality of the borrower. The buyers of the resulting paper didn’t know how risky the underlying loans were until everything fell apart when the bubble collapsed.

“Riegle-Neal Act “

That’s one I’m not familiar with. I see from a quick look at wikipedia that it is similar to Gramm-Leach-Bliley, which repealed part of Glass Steagall.

” GSEs and FHA back over 90% of all home loans. Before the mess it was 50%”

The FHA was set up in 1934 to insure loans. Fannie and Freddie didn’t insure any loans at all prior to the Bush administration’s decision to take over the two firms. There was no legal requirement for the government to insure Fannie and Freddie’s paper, it was purely a decision made by the Bush administration.

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